Scarcity of raw materials, scarcity of water, scarcity of energy: these are huge challenges facing our world today. Modern man is living on ecological credit, but there is a remedy for this: the circular economy.

By completing the cycles of materials, water or energy, this “alternative” economy enables the real economy to grow, while reducing amounts extracted from the natural environment. In the circular economy, one person’s waste automatically becomes another person’s resource: not only is this economy based on recovery and re-use, but also and even more significant, it allows for re-creation of the economy.

Demand for raw materials is exploding as a result of demographic growth and rising living standards. The corollary of this is that prices have tripled since 2000. As we are all aware, we cannot endlessly draw on the natural environment – a number of shortages are already making themselves felt.

The value in waste water and used cooking oil

So how can we overcome the dilemma  between rising resource depletion and growing needs? By giving value back to things that had lost their value. That is the whole point of the circular economy. It is based on a simple idea, but one that is complicated to put into practice: freeing activity from the “Extract – Manufacture – Throw away” cycle by organizing constant recycling of the same resources in an endless, or almost endless, cycle. In this way, the inevitable heat output from Data Centers is converted into urban heating, waste water is turned into bioplastics, organic waste becomes fertilizer, biogas is turned into electricity, and used cooking oil becomes biofuel…

The potential of the circular economy is enormous. It could save the world $1,000 billion in natural resources every year, according to the Ellen McArthur Foundation. In fact, the waste from developed countries constitutes the 21st century’s largest source of raw materials.

When scarcity strikes, the circular economy allows economic players not only to secure their supplies, but also to reduce their expenditure and create additional revenue. Nor does this approach arise from exclusively environmental concerns; for the regions, it is a factor in their development, and for businesses, it is a source of competitiveness and wealth. In some cases, the stakes are even higher, because the circular economy can increase the independence of countries with meager natural resources.

This alternative economy is already functioning in the sectors of ferrous metals, paper and glass, whose recycling rates exceed 90% in many cities. But there is so much yet to be done. Of the 4 billion tons of waste produced worldwide every year, only 1 billion is recycled; on a worldwide scale, barely 2% of waste water is re-used.

Too slow

The circular economy is expanding, but not enough, and too slowly. There are several reasons for this: First, manual sorting of waste is still expensive in developed countries. Second, the price of the converted material is often too high in comparison with the raw material; hence the need for initial financial aid. Finally, industrial companies to reluctant to use recycled materials, which they regard as second choice. To overcome their reservations, they have to be given the same guarantees of quality, permanence and regularity of supply as for virgin materials.

If the circular economy is to become more widespread, we must redouble our efforts at innovation and cooperation. Innovation, because it will enable us to put more used materials back into the chain of production. Thus, after years of research, we have opened a plant in England capable of recovering particles of precious metals from the dust on the roads emitted from car exhausts, such as platinum, palladium and rhodium. Cooperation, because simply converting waste is not enough; it is essential to also develop relations with customers willing buy it in the form of secondary raw materials.

We are witnessing the dawn of a new industrial revolution which introduces the circular economy. By being more sparing and efficient, the circular economy provides an antidote to over-exploitation of the environment and to the more pessimistic forecasts, by prolonging the life-cycle of raw materials, water and energy. It teaches us something not theoretical but is based on facts, and it draws inspiration from nature, in which everything is a resource. By converting waste into resources, the circular economy imitates the nature of how ecosystems work, and like them, seeks to do away with the very concept of waste. Seven centuries ago, Leonardo da Vinci gave us this advice: “Learn from nature, that’s where our future lies”.

Author: Antoine Frérot, Chairman and CEO, Veolia, France

Image: Wayne Garrett of Canada makes final touches to his art installation “CLOUD”, made up of 5000 new and recycled lightbulbs, along the Marina Bay in Singapore March 5, 2014. REUTERS/Edgar Su